China’s small steel firms are the better bet than the big steel mills.
By Daniel at 26 March, 2009, 8:36 pm
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
The Shanghai bourse has already found local success with copper and other commodity futures that have had a growing influence on global markets, and it may face better odds with steel, which has yet to gather critical mass on any of the four exchanges that launched contracts over the past few years.
“We have not yet had a global pricing center for steel products, and the futures in Shanghai can play the role,” said Tan Wentao, head of research and development at Shanghai-based HNA Topwin Futures.
“China is a country with a mature steel industry and great growth potential, because it has many steel firms in different provinces, which would lend weight to a national, even a global, benchmark,” he said.
…
And in China, the contract is emerging after years of opposition by the China Iron and Steel Association, which fears financial speculators may distort already volatile prices.
But with 170,000 small-scale steel trading firms in China alone, there should be no shortage of participants. Tan says he expects trading houses to make up 60-70 percent of the market.
“Steel futures is a relatively volatile business … and small firms are more interested in the (futures) business as they have a more flexible operational structure than big steel mills,” said Kuang Bo, deputy general manager at Guangdong-based Asia Steel, a scrap metals manufacturer and wholesaler.
http://www.reuters.com/article/newsOne/idUSTRE52P0UW20090326
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
No comments yet.